Apple hopes secret sauce can reshape markets

NEW YORK (AFP) – It’s not the first with a smartwatch or mobile payments system, but Apple is likely to use its market muscle and sense of style and innovation to redefine those categories.

With its ambitious series of product announcements, Apple has returned to its familiar formula – without creating any new product categories, it seeks to refine and perfect them to make them a must-have for consumers.

“Innovation is back at Apple after a three-year pause,” said Trip Chowdhry at Global Equities Research, referring to the period since the death of co-founder Steve Jobs in 2011.

Apple’s long-anticipated event on Tuesday unveiled the company’s first smartwatch and two large-screen versions of the iPhone, and a mobile payment system that ties into the devices.

Chowdhry called the Apple Watch “groundbreaking,” and far superior to rival devices using Google’s Android Wear software, even though it has come out well after rivals like Pebble, Samsung Gear and Motorola 360.

An Apple Watch is seen during an Apple event at the Flint Center in Cupertino, California – REUTERS

“Right now, none of the Android Wear devices comes even close to what Apple Watch can do in terms of user interface and capabilities,” Chowdhry said in a note to clients.

The analyst predicted that Apple Pay, the mobile system allowing users to tap the new iPhone or smartwatch, would be a “runaway success” because of the convenience and security built into the phones, and would also give consumers a reason to upgrade their handsets.

Jonathan Collins at ABI Research offered a similar view, saying Apple may boost the wearables segment with its smartwatch.

“Given the power and reach of the company and the strength of its brand this cannot be underestimated,” Collins said in a research note.

“Apple has a long history of making existing technologies appeal to a far wider audience and going on to make its offering synonymous with the wider market.”

JP Gownder at Forrester Research said, “Apple will legitimise and create the mass market wearables category.”

Apple Pay meanwhile could be a wild card that draws more people into the company’s orbit. By lining up major banks and retailers, Apple appears to have overcome many of the hurdles faced by other mobile payment systems.

“We believe Apple just reshaped the payments industry,” said Benjamin Reitzes, analyst at Barclays, citing the large number of Apple partners and security features of the system.

Eden Zoller at the research firm Ovum said Apple “will prove effective at marketing mobile payments to consumers, not as a technology but as something that will make paying for goods and services with your phone fast, easy and even fun.”

“When Apple introduces cool features on the iPhone people tend to use them, which is critical for the future of NFC (near field communication) as an enabling technology,” Zoller added. “If consumers start using NFC for proximity payments then merchants will be more prepared to invest in it, a key factor that has held NFC back.”

Kulbinder Garcha at Credit Suisse said that even if Apple Pay does not generate significant revenues, it fits nicely into the Apple strategy of integrating hardware, software and services.

“We believe that the mobile wallet will likely re-energise the iOS ecosystem and hardware sales,” Garcha said in a note to clients.